Reward and punishment motivate animal behaviors, produce the feelings of pleasure and disappointment, and guide learning and memory formation. They are a matter of life and death for an individual as well as the species, and affect mood and emotion in our daily life. Mice share with humans key features of reward- and punishment-related behaviors and the underlying neural pathways. Using genetically modified mice as the model system, my laboratory studies how neural circuits organize behavioral responses to reward and punishment. We focus on the dorsal raphe nucleus and the medial habenula, as well as their interconnected brain areas. Using electrophysiological and optical approaches, we record the activity patterns of genetically identified neuron types from behaving mice. We also combine optogenetics and chemogenetics to examine how stimulation, inhibition, or lesion of specific neurons affects animal behaviors. Finally, we carry out whole-cell patch recordings from brain slices to study the effects of drugs and cellular signal transduction pathways. The dysfunctions of reward and punishment processing are associated with several devastating psychiatric disorders, such as depression, schizophrenia, and drug addiction. Thus, our study not only help understand the neurobiological basis of some fundamental animal behaviors but also may facilitate clinical efforts toward the cure of mental diseases.